ASEAN Economic Community 2015: Challenges and opportunities facing food and agriculture sector in South-East Asia

The Association of South-East Asian Nations (ASEAN) member countries will enter 2015 with the launch of the ASEAN Economic Community. The region represented by the association is home to over 600 million people with a large share of them belong to middle class income groups.

Some ASEAN members have expressed their concerns about being unprepared for the AEC in 2015. One of the sectors frequently mentioned is the agriculture and food sector.

The AEC which is going to open up its members’ borders to a freer flow of goods and services including agricultural and food commodities is argued to pose risks to smallholder’s sustainability due to their lack of competitiveness.

Food, agriculture and forestry is one of the core elements in one of the four pillars of the the AEC blueprint , namely ‘single market and production base’. The blueprint was adopted by the ASEAN leaders at the 13th ASEAN Summit on 20 November 2007 in Singapore.  The blueprint serves as a coherent master plan guiding the establishment of the AEC in 2015.

In a condition where domestic producers have limited choices but to be ready to compete with foreign suppliers, investments in research and development (R&D) which assists smallholder farmers and producers to improve their productivity, resilience and therefore welfare seems to be a necessity.

This is aligned with the AEC blueprint (page 18) which clearly defines the importance of promoting “collaborative research and technology transfer in agriculture and food products”.

However, there is room for improvements in the implementation of the planned ‘actions’ as defined by the AEC blueprint.

The 2013 OECD report on the effectiveness of research and innovation management at policy and institutional levels in four ASEAN member countries – Cambodia, Malaysia, Thailand and Vietnam- edited by Asa Olsson and Lynn Meek concluded that “while these countries are generally committed to developing their research and innovation capacity, it is not clear to what extent they have explicitly investigated the foundations for such a commitment” (page 186).

Strategies to improve R&D can be developed through various ways. In Indonesia, Dr Hermanto Siregar, a member of the presidential-appointed National Economic Committee (KEN) as interviewed by the Jakarta Globe (25 June 2014), noted that foreign direct investments ‘but imposing strict conditions for national interests in the future’ as well as research collaboration will allow the domestic agriculture and food sectors learn the technology from experts in other countries.

The key to attract FDI is an open investment regime whilst still ensuring national interests are being met.

A recent report, however, suggests that the switch to outward-looking policy regime is not straightforward.

According to Chia (2013) as published by the Asian Development Bank suggested that free movement of goods, services, labour and capital is not sufficient to ensure foreign suppliers have access equal to that of domestic suppliers considering each country’s behind the border measures. Even if special treatment for domestic suppliers is removed, there is still a need to harmonise relevant laws including intellectual property rights, competition law, etc.

Chia (2013) argued that the AEC has come a long way but by end of 2011 its implementation rate was only 67.5% raising concerns over its ability to meet the planned time frame and standard.

The above challenge indicates opportunities for further collaboration between developed countries and emerging countries in Asia especially in investments in agriculture R&D to support South-East countries design and implement smallholder-inclusive and efficient agricultural development strategies.

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